Walgreens Case Study Summary
YES – through continued acquisitions and mergers they grew and positioned themselves very well
• Was the company strong out the gate or a laggard? Pro-active or reactive?
Pro-active throughout the economic downturn – positioned themselves well with the change in healthcare laws too (although this happened a few years after recession ended officially)
Maybe compare earnings stability and how dividends faired during recessionary years?
Earnings stability is critical for dividend-paying stocks.
Walgreen (WAG) is solid in this respect, carrying a five-year Stability Factor of 3 on a scale of 0 (calm) to 99 (wild). The three-year rating, at 2, is even better.
During the recession of 2007-09, Walgreen continued to increase its dividend, and earnings stability had something to do with that.
• Did the company sit on its resources or put it towards building competitive
advantage?
Walgreens instituted “Rewiring for Growth” slowing store openings and offering early retirement and severance packages to corporate employees.
• How did the company fare with respect to its most direct competitor?
In Recession CVS Seems Better Positioned Than Walgreen
Feb. 11, 2009 2:42 AM ET | 15 comments | Includes: CVS, WAG …show more content…
This fundamental difference in the two organizations cascades throughout their financial statements in the form of debt for CVS Caremark which is offset by growth of margins and profits; and in the form of a much healthier balance sheet for Walgreens. This analysis shows the results of each company’s operations, the ramification of those operations on their financial statements, and the conclusion that because of their more conservative, less risky business model, Walgreens maintains a healthier operation, despite equally impressive growth by both
• Was the company strong out the gate or a laggard? Pro-active or reactive?
Pro-active throughout the economic downturn – positioned themselves well with the change in healthcare laws too (although this happened a few years after recession ended officially)
Maybe compare earnings stability and how dividends faired during recessionary years?
Earnings stability is critical for dividend-paying stocks.
Walgreen (WAG) is solid in this respect, carrying a five-year Stability Factor of 3 on a scale of 0 (calm) to 99 (wild). The three-year rating, at 2, is even better.
During the recession of 2007-09, Walgreen continued to increase its dividend, and earnings stability had something to do with that.
• Did the company sit on its resources or put it towards building competitive
advantage?
Walgreens instituted “Rewiring for Growth” slowing store openings and offering early retirement and severance packages to corporate employees.
• How did the company fare with respect to its most direct competitor?
In Recession CVS Seems Better Positioned Than Walgreen
Feb. 11, 2009 2:42 AM ET | 15 comments | Includes: CVS, WAG …show more content…
This fundamental difference in the two organizations cascades throughout their financial statements in the form of debt for CVS Caremark which is offset by growth of margins and profits; and in the form of a much healthier balance sheet for Walgreens. This analysis shows the results of each company’s operations, the ramification of those operations on their financial statements, and the conclusion that because of their more conservative, less risky business model, Walgreens maintains a healthier operation, despite equally impressive growth by both